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Cell, basic firms to set STD rates

BS Economy Bureau in New Delhi | July 02, 2003 12:50 IST

The Telecom Regulatory Authority of India on Tuesday allowed cellular and basic operators to set tariffs for STD calls, instead of relying on the rates set by long-distance operators.

In an interim order issued today, the regulator has shifted the onus of paying the interconnect charges from long-distance carriers like Bharti and Bharat Sanchar Nigam Ltd to the cellular and basic service operators from whose network the call has originated.

This will mean companies like Bharti Telesonic, which began the tariff war in the STD segment, will not be able to offer packages to retail subscribers directly.

The immediate impact will be on Reliance Infocomm, which will not be able to offer a 40 paise a minute STD call unless it decides to pay the interconnect charges from its own pocket.

However, integrated companies like BSNL, which has access as well as long-distance network, will stand to gain from the interim order as they will be able to offer lower STD rates by waiving the share accruing to the originator, making up the cost through carriage and terminating charges.

Trai has justified its position saying the profit margin set by the originating access provider should factor in the cost of payment of due carrier and termination charges.

"Since the tariff reduction will be carried out by the access provider, his margin must bear the burden of the tariff cut," a Trai press statement said.

The regulator said if tariffs were to be further reduced by the access provider, it would have to do so by reducing its share meant for the originating network.

The interim order was necessitated after the industry had pointed out that long-distance tariffs had dropped so low that in some cases it was lower than the sum of originating, carriage and terminating charges, including the access deficit charges.

For instance, in an inter-circle call above 500 km, the charges at the originating and terminating end with uniform access deficit charges is Rs 2.00 per minutes each.

The carriage charge as per the interconnect norms is Rs 1.10 per minute, so the total charge should be Rs 5.10 per minute. However, the approved tariff for this distance slab is Rs 4.80 per minute.

Trai is expected to give its final order by August. The issue before Trai was that how this shortfall of 30 paise per minute should be made up.

Trai pointed out that since carrier access codes, which allows subscribers to choose their long distance operator,  was not in place, the access providers will be given the benefit of fixing tariffs.


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